The Dow (+1.0%), NASDAQ (+2.8%) and S&P 500 (+1.5%) all ended last week in positive territory, with the NASDAQ and S&P 500 eclipsing record highs, and the Dow nipping at its all time peak. Meanwhile, taxable bonds and tax-free municipal bonds ended the week roughly flat to down as little as 0.1%.
Now that we have concluded the best corporate earnings season on record, economists have been focusing on the Fed. In the middle of last week, one of the committee members opined that the Fed should begin tightening its monetary policy (similar to raising interest rates), and the markets tumbled. Then on Friday, Fed Chairman Jerome Powell indicated that the Fed would continue to keep monetary policy intact for a while longer, and the market sky rocketed on the news ending the week on a positive note. However, it is expected that the Fed will be looking closely to the August jobs report that will be released on Friday. An extraordinarily good job report could cause the Fed to consider tightening monetary policy again. Offsetting or impacting the jobs report could be the recent uptick in COVID cases and the possibility of further lockdowns, so Friday’s jobs report may be over shadowed to some extent.
In US and world news, Hurricane Ida is wreaking havoc on Louisiana, exactly 16 years after Hurricane Katrina destroyed the city. That hurricane will be travelling north and dumping tons of rain and causing significant damage to several states in the south. US troops are scheduled to fully evacuate from Afghanistan this week, which is raising domestic political debates. But when is it ever quiet in Washington, right?